New Delhi: Welcoming the positive response to Nawaz Sharif's "initiatives" by Prime Minister Manmohan Singh, Pakistan on Saturday said both sides will have to work peacefully to resolve all outstanding issues, including Kashmir, and it is time to shed the old way of thinking and using of stereotypes.

It also said good neighbourly, friendly and cooperative relations between Pakistan and India, based on mutual respect and mutual benefit, are in the interest of the people of the two countries and of the region as a whole.

"It is indeed heartening that Prime Minister Manmohan Singh, who is widely respected in Pakistan, has responded positively to the initiatives of Mr Nawaz Sharif and sent a special envoy to meet the Prime Minister-designate. Statements emanating from both sides have contributed to improving the atmospherics," the Pakistan High Commission said in New Delhi in a statement.

It, however, said it is also important that the "phenomenal societal change" in Pakistan is understood and appreciated in India.

"It is time to shed the old way of thinking and using of stereotypes. There is every reason for optimism."

The statement said both sides have to work on the dialogue process to peacefully resolve all outstanding issues, including Kashmir, and explore new avenues of cooperation.

It said Sharif had extensively interacted with the Indian leadership. The high point was the Lahore Summit with Prime Minister Atal Bihari Vajpayee in February 1999.

"He genuinely wants to take the process forward. A historic opportunity now exists to bringing about a qualitative improvement in relations," the statement read.